Oligarch s billion dollar gamble: the cards are dealt again

Moscow, Norilsk and the Caribbean. In the billion dollar gamble the cards have been dealt again and this time not in Oleg Deripaska's favour. His opponents are the billionaires Prokhorov and Vekselberg as well as a court in the Caribbean.

For the last six months the fight over the world's largest nickel producer, Norilsk Nickel has been severe. Now it looks as if Oleg Deripaska not only has to give up his attempt to take over NorNickel totally, but has to worry about his own standing and power within his basic business RusAl, despite being related to Yeltsin through marriage.

At the weekend, the supreme court on the Caribbean island of St Kitts and Nevis decided to grant the management of Norilsk the permission to buy back stocks from minority shareholders in the amount of $3.4 billion.

This would shift the majority vote for shareholders at the forthcoming AGM in early March against Deripaska, who through shrewd tactics, had tried to block this from happening, by appealing to a Caribbean supreme court.

Pressure from all sides

Deripaska is also under pressure from two of his shareholders within his own company, Rusal. Victor Vekselberg, who owns 15.8 percent of Rusal's stock, is considering selling them. He is offering his shares first of all to the majority shareholder Deripaska (En +).

Deripaska, who holds 47.41 percent of shares in Rusal, will find it difficult to take on Vekselber's stock, due to Rusal's $11.7 billion debt (as per end of 2010). This in turn could have a bad affect on Rusal's share price, unless Deripaska should decide on a way out, that he had rejected up to now.

Vekselberg, Rusal CEO since 2007, asked Deripaska to obtain the necessary cash by selling his share in Norilsk Nickel, repeating a suggestion from another major Rusal shareholder.

Mikhail Prokhorov, who holds the same amount for Rusla shares as Vekselberg, had suggested mid-February that Deripaska should sell out of his 25 percent stake in Norilsk Nickel at least 20 % at $12.8 billion (ˆ9.5 billion) to Vladimir Potanin.

Up to now Deripaska has rejected the takeover of his shares by Potanin and demanded a price of $20 billion, knowing that this amount was excessive.

Selling to his long term enemy, Potanin and admitting that he has lost the year long gamble is not Deripaska's desire.

In 2007, Deripaska manged, on hand of a finance deal, to acquire 25 percent of Norisk Nickel shares from Mikhail Prokhorov, who had fallen out with Potanin. During the finance crises, which hit Rusal hard, Deripaska, had to divide evenly 33 percent of his Rusal stock between Vekselberg and Prokhorov, in order to save the company.

Under the mounting pressure from his business partners and the Caribbean court, Deripaska, might just have to give in and withdraw from Norilsk's profitable business.